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Your FIRE (Financial Independence, Retire Early) Number?

31,469 Views | 218 Replies | Last: 3 yr ago by Ulrich
The Original AG 76
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In reply to halfastros81 • 12:38p, 8/11/18
AG
halfastros81 said:
What % of preretirement spending do you think is prudent in retirement. Obviously it varies from person to person and family to family and based on age but I like to get a feel from those that are actually retired. I believe I pretty high % applies from 60-70 yrs of age and then a much
Lower % thereafter.


It is so lifestyle dependent that I'm not sure I can answer. What I have found is that. , by n large, we don't spend near as much. No need for a bunch of clothes . At our age we have all of the " stuff" we could possibly use . In fact we are dumping crap as much as possible. Consumables are the same and most of us treat ourselves to that " last " uber comfortable car. Plug in 75% , run your numbers , and see what the projections are .
A common comment I hear at our old fart lunches is it's amazing how little we are spending.
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SW AG80
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In reply to The Original AG 76 • 12:55p, 8/11/18
AG
When I was in my early 30s I started making some pretty good money and started an SEP. A few years later my financial planner told me I needed to enjoy the journey more than I was because I was socking away as much as I could and we were living on very little. I slowly began enjoying the journey more and more, and now I am full throttle. So I have always been focused on saving for retirement. We will have a good monthly income without touching the principle of our retirement accounts. My wife worked also. Our biggest extravagance is Aggie football and a house in Aggieland. But that house is also a good investment. I did not play the corporate world. That is just not my personality.

As you can tell, I am really looking forward to retirement and catching all of the grandkids' activities and having family and friends at the river and in Aggieland. Damn, as I type this I realize how very fortunate we are!

Also, the 1990s were very good for the stock market and I made some good investments in 2009 when the market tanked. The best tip I ever got on a stock I got from TexAgs in this very forum. That one stock tip is a big factor in allowing me to retire at the age of 63. IT IS GREAT TO BE AN AGGIE. I know the questions will come, "What stock did you read about in this forum that was such a good deal?" It was Las Vegas Sands. Bought it at around $4.40 per share and sold it at a little over $60 per share. And best of all I did this within my SEP/IRA account. So a win-win.
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halfastros81
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In reply to SW AG80 • 1:02p, 8/11/18
AG
That's an interesting story (stock pick). Thanks for sharing
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rononeill
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11:15a, 8/13/18
so when yall are talking about 3-4% of principle, how are you considering inflation? If you're looking for 150k per year, it looks like you're thinking you need 4.25mm. but at 3% inflation, that 150k is going to play like $55k per year 35 years later.
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AggiEE
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12:00p, 8/13/18
Stocks have historically returned 6-7% AFTER inflation, and 10% nominally.

3-4% covers you in an unusually bad market environment so you don't run out of money for a 30 year drawdown period.
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BTHOB
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In reply to rononeill • 12:03p, 8/13/18
AG
rononeill said:
so when yall are talking about 3-4% of principle, how are you considering inflation? If you're looking for 150k per year, it looks like you're thinking you need 4.25mm. but at 3% inflation, that 150k is going to play like $55k per year 35 years later.
One could use different models for projecting inflation, but the traditional thinking is that if you plan on withdrawing 3-4% of portfolio throughout retirement, then you start with (for example) 3% of your starting portfolio value the first year, and then increase that withdrawal amount each subsequent year to account for inflation. Withdrawing 3% of starting portfolio value per year (with inflation adjustment each year), has never resulted in a retiree running out of money over a 30+ year retirement period.

If the market is averaging 2% inflation and 5% nominal returns (which is very low historically speaking), then that's approximately a 3% real return. So, a person withdrawing at 3% rate and adjusting for inflation each year would theoretically maintain their portfolio value throughout retirement. Since the markets have historically returned more than that, then theoretically, following this plan a retiree would have more money at the end of retirement than when retirement began (even accounting for inflation).
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rononeill
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12:30p, 8/13/18
that all makes sense. I'm talking about the 30 year olds thinking they need 4.25mm to retire w 150k/yr at 60. wouldn't that mean the 4.25 needs to look more like 12 in 35 years?
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BTHOB
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In reply to rononeill • 12:41p, 8/13/18
AG
rononeill said:
that all makes sense. I'm talking about the 30 year olds thinking they need 4.25mm to retire w 150k/yr at 60. wouldn't that mean the 4.25 needs to look more like 12 in 35 years?
Basically, yes. So, you can project the amount you need using today's dollars and a number you assign to portfolio appreciation and inflation.

Therefore, if they withdraw 150K from a 4.25MM portfolio the first year, then increase that 150K each year by the amount of inflation, then in 35years they would be withdrawing a much bigger amount from a much larger portfolio which has ALSO enjoyed 35 years of growth (theoretically).

Also, if they want to see what they need STARTING in 35 years, they can assume a certain portfolio growth, as well as a certain inflation factor and come up with basically the same number. It all depends on if they're using nominal dollars or real dollars.
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Cyp0111
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In reply to rononeill • 12:48p, 8/13/18
You have to take into account investment returns on the lump sum amount as well. I'm more conservative and only plan a 2% withdraw rate. The smart decision is to bolster with other revenue streams like rentals, side business etc.
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rononeill
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3:01p, 8/13/18
We're on the same page. I just think it's an important point to clarify for folks putting together a plan. I talk to a lot of folks that think 5mm is their number if they want 200k to live in, but they're 35 or 40- the reality is they need to inflate that figure to their retirement age.
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Cyp0111
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In reply to rononeill • 3:44p, 8/13/18
I really like the calculator personal capital has for retirement planning.
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The Original AG 76
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4:21p, 8/13/18
AG
The best calculator I've found is a Monte-
Carlo based one called. https://www.firecalc.com
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corndog04
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In reply to The Original AG 76 • 4:24p, 8/13/18
AG
I prefer cFireSim over firecalc as I think the features are a little better. Both are good though.
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The Original AG 76
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In reply to corndog04 • 4:31p, 8/13/18
AG
Thanks... I'll try it out
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Cyp0111
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In reply to The Original AG 76 • 5:35p, 8/13/18
Use this.

https://www.portfoliovisualizer.com/monte-carlo-simulation
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TXAGFAN
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9:48p, 8/13/18
AG
If I can get to $3 million cash/investments with house paid off and I'm at least 45 I'll be done. I'm on track without any huge assumptions.

No idea how some of you folks plan to get to $5 million and $10 million numbers. I think I'm fairly well compensated and a good saver, but there is just no way. I suppose I could get there if I didn't enjoy life in my 30's (travel, a couple hobbies, I recently bought a vacation home). If you have kids it seems like you need to have a PAYDAY with an IPO, have your own business you sell, etc.
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smucket
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9:56p, 8/13/18
AG
To OP, my nut is 3.6 and when I get to $4mm next year I' giving the company 6 months and I'm out at 52. Going to look at houses in Hot Springs Village next week. Plan for early semi retirememt (will prob do some consulting for a while) is travel, attention to lfamily, long bike rides, some golf and reading Will Durant books. Also working to grow that $4 every year while talking $150k pretax for living. My taxable accounts currently create $74k/ yr in income and I will be renting my house which currently would produce $2500 momthly after all expenses (except for any major capex). I have a pension that kicks in at 65 and do expect social security for both me and my wife, the dollars will just be worth less. I use firecalc and financialsamurai.com, and I subscribe to high dividend opportunities on seeking alpha.
I don't think there has ever been a better time to retire early with all of the websites and information readily available to all of us as long as you spend time, actually a lot of time, reading up on it and planning ahead.
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Sandman98
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In reply to smucket • 12:03a, 8/14/18
AG
smucket said:
To OP, my nut is 3.6 and when I get to $4mm next year I' giving the company 6 months and I'm out at 52. Going to look at houses in Hot Springs Village next week. Plan for early semi retirememt (will prob do some consulting for a while) is travel, attention to lfamily, long bike rides, some golf and reading Will Durant books. Also working to grow that $4 every year while talking $150k pretax for living. My taxable accounts currently create $74k/ yr in income and I will be renting my house which currently would produce $2500 momthly after all expenses (except for any major capex). I have a pension that kicks in at 65 and do expect social security for both me and my wife, the dollars will just be worth less. I use firecalc and financialsamurai.com, and I subscribe to high dividend opportunities on seeking alpha.
I don't think there has ever been a better time to retire early with all of the websites and information readily available to all of us as long as you spend time, actually a lot of time, reading up on it and planning ahead.


What's your 13 year plan for health insurance?
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smucket
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In reply to Sandman98 • 9:54a, 8/14/18
AG
Sandman that's probably my biggest question heading into FIRE and I have not fully figured it out. My initial investigation is into:

1-Ehealthinsurance.com
2-policygenius.com
3-The AICPA. My wife and I are both CPAs so going this route may be cheapest
4-Paying cash/concierge Dr


Still investigating how best to approach this topic. I'll keep posting info as I find out more.
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The Original AG 76
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In reply to smucket • 10:07a, 8/14/18
AG
smucket said:
Sandman that's probably my biggest question heading into FIRE and I have not fully figured it out. My initial investigation is into:

1-Ehealthinsurance.com
2-policygenius.com
3-The AICPA. My wife and I are both CPAs so going this route may be cheapest
4-Paying cash/concierge Dr


Still investigating how best to approach this topic. I'll keep posting info as I find out more.
If you are in relatively good health and have a pretty good genetic background I would ABSOLUTELY look into the Concierge medicine and a catastrophic coverage route. By all means go visit one of the concierge doc groups and visit.They can usually help with a good catastrophic policy and you would be surprised at the covered speciality docs that are embers of the group. Most of the have cardiologists, orthopedics, internal, dematologists all of the common specialists as part of their covered groups. They usually have their own surgery center where a ton of the usually in-patient surgeries can be performed.
By all mean look into this option.
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SPF250
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10:33a, 8/14/18
AG
This is a good thread. I have previously requested a separate Retirement forum on TexAgs, but to no avail. Retirement encompasses substantially more than what might fall into a Business and Investing forum. If anyone else agrees, please go to the Technical Support forum and make a request. Maybe we can get a little momentum started.
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Cyp0111
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In reply to SPF250 • 10:38a, 8/14/18
I think a retirement and Investment only board would be fantastic. Texags version of boggleheads.
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SPF250
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10:44a, 8/14/18
AG
I just bumped the post I made over a year ago in Technical Support. Anybody so inclined, maybe post or blue star there.

https://texags.com/forums/69/topics/2866933/replies/52331238

Edit: Sorry for the hijack.
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TwoMarksHand
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In reply to Cyp0111 • 11:33a, 8/14/18
AG
Cyp0111 said:
I think a retirement and Investment only board would be fantastic. Texags version of boggleheads.
Agree. But day trading should not be included in the board.
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The Wonderer
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11:43a, 8/14/18
AG
A venn diagram of B&I and retirement is going to have a lot of overlap.

TA doesn't need another board.
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752bro4
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In reply to The Wonderer • 11:46a, 8/14/18
AG
The Wonderer said:
A venn diagram of B&I and retirement is going to have a lot of overlap.

TA doesn't need another board.
It would be like spinning the Outdoors board off to a firearms board, or a cargo shorts fashion board.
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The Wonderer
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In reply to 752bro4 • 12:11p, 8/14/18
AG
752bro4 said:
The Wonderer said:
A venn diagram of B&I and retirement is going to have a lot of overlap.

TA doesn't need another board.
It would be like spinning the Outdoors board off to a firearms board, or a cargo shorts fashion board.
We already have this.
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GE
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12:13p, 8/14/18
AG
Question that comes to mind:

For those of you who intend to retire early, is there any career advancement or salary increase that would disincentivize you from doing so? I'm thinking about jobs where you may be at $350K salary at age 40 ramping up to over $800K by the time you're 50. At some point it seems like it would be hard to leave on the table from a money standpoint, especially given increasing life expectancies

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The Wonderer
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In reply to GE • 12:26p, 8/14/18
AG
GE said:
Question that comes to mind:

For those of you who intend to retire early, is there any career advancement or salary increase that would disincentivize you from doing so? I'm thinking about jobs where you may be at $350K salary at age 40 ramping up to over $800K by the time you're 50. At some point it seems like it would be hard to leave on the table from a money standpoint, especially given increasing life expectancies

Would depend on how much work they expect me to do for that price.
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Pelayo
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12:47p, 8/14/18
AG
Goal:

10 million in 2018 chained dollars in equities and bonds 5 million in income prodicing RE assets that are free and clear, two to three million in annuity like products, Houses paid for. Living off 50% of gains less inflation annually then other 50% can reinvest once "retired". Must leave estate behind for special needs child.

Realistically, 2/3 of that. By age 57. I think all the gas/desire to work I'll have left will be spent by then.
No material on this site is intended to be a substitute for professional medical advice, diagnosis or treatment. See full Medical Disclaimer.
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Cyp0111
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In reply to The Wonderer • 12:49p, 8/14/18
There are very few jobs with that type of tail. C-level, MD at I-Bank/Mgmt consulting or law partner.
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GE
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In reply to The Wonderer • 12:51p, 8/14/18
AG
The Wonderer said:
GE said:
Question that comes to mind:

For those of you who intend to retire early, is there any career advancement or salary increase that would disincentivize you from doing so? I'm thinking about jobs where you may be at $350K salary at age 40 ramping up to over $800K by the time you're 50. At some point it seems like it would be hard to leave on the table from a money standpoint, especially given increasing life expectancies

Would depend on how much work they expect me to do for that price.
40-45 hours most weeks with a ton of flexibility and ability to work remotely but necessity to be accessible by phone or email at least within 48 hours
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The Wonderer
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In reply to GE • 12:54p, 8/14/18
AG
GE said:
The Wonderer said:
GE said:
Question that comes to mind:

For those of you who intend to retire early, is there any career advancement or salary increase that would disincentivize you from doing so? I'm thinking about jobs where you may be at $350K salary at age 40 ramping up to over $800K by the time you're 50. At some point it seems like it would be hard to leave on the table from a money standpoint, especially given increasing life expectancies

Would depend on how much work they expect me to do for that price.
40-45 hours most weeks with a ton of flexibility and ability to work remotely but necessity to be accessible by phone or email at least within 48 hours
That's actually what I'm shooting for, so yeah. I should make it by 40; 45 at the latest. I'd walk away/transition to my replacement the moment my last kid enters college.
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12:54p, 8/14/18
Cyp0111
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In reply to [removed post] • 12:56p, 8/14/18
I think most people should plan around 2% withdraw rate is retiring early. I also think early retirement should include some form of part time work to supplement lost income.
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